Yahoo Finance Why Is JetBlue (JBLU) Up 6.3% Since Last Earnings Report?
It has been about a month since the last earnings report for JetBlue Airways (JBLU). Shares have added about 6.3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is JetBlue due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Earnings Miss at JetBlue in Q3
JetBlue's third-quarter 2022 earnings (excluding 3 cents from non-recurring items) of 21 cents per share fell short of the Zacks Consensus Estimate of 24 cents. Higher operating expenses hurt the bottom line. Strength in air-travel demand, however, helped JBLU reap a quarterly profit since the onset of the pandemic.
In the year-ago quarter, JBLU incurred a loss of 12 cents per share. Operating revenues of $2,562 million climbed 29.9% year over year and beat the the Zacks Consensus Estimate of $2,559.7 million. The double-digit year-over-year jump reflects improving air-travel demand.
Passenger revenues, accounting for the bulk of the top line (94.3%), increased to $2,415 million in third-quarter 2022 from $1,856 million a year ago when the impact of coronavirus on air-travel demand was more severe. Other revenues rose 27.1% to $147 million.
Other Details
All comparisons are presented on a year-over-year basis. Revenue per available seat mile (RASM: a key measure of unit revenues) in the reported quarter improved 29.6% to 15.80 cents. Passenger revenue per available seat mile (PRASM) rose 29.7% to 14.89 cents owing to better air-travel demand. Average fare at JetBlue during the September quarter increased 12.4% to $229.95. Yield per passenger mile shot up 20.4% year over year to 17.30 cents.
Reflecting the uptick in air-travel demand, consolidated traffic (measured in revenue passenger miles) improved 8.1% in the reported quarter. To cater to this increased demand, capacity (measured in available seat miles) inched up 0.3% to 16,217 million. Consolidated load factor (percentage of seats filled by passengers) increased 6.2 percentage points to 86.1% in the third quarter of 2022 as traffic growth outpaced capacity expansion.
In the third quarter, total operating expenses (on a reported basis) escalated 35.7% to $2,423 million, mainly due to an 86% rise in aircraft fuel expenses and related taxes. Average fuel price per gallon (including related taxes) climbed to $3.84 from $2.08 a year ago, as oil prices move north. JetBlue’s operating expenses per available seat mile (CASM) increased 35.3% to 14.94 cents. Excluding fuel, the metric increased only 3.2% to 9.69 cents.
JetBlue exited the third quarter of 2022 with cash and cash equivalents of $1,401 million compared with $2,018 million at the end of 2021. Total debt at the end of the reported quarter was $3,759 million compared with $4,006 million at 2021 end. During the quarter, JBLU paid off $66 million of debt.
Outlook
While providing guidance for fourth-quarter 2022, management stated that all comparisons are made with respect to the fourth quarter of 2019. Capacity is anticipated to increase in the 1-4% range from fourth-quarter 2019 actuals. CASM, excluding fuel and special items, is predicted to rise 8.5-10.5%.
RASM is forecast to increase in the 15-19% range. Average fuel cost per gallon in the December quarter is estimated to be $3.65. Capital expenditures in the fourth quarter are anticipated to be roughly $420 million. Tax rate is anticipated to be 12%. Number of shares are expected to be roughly 329 million. JBLU expects to be profitable in the December quarter with a pretax margin in mid-single digits.
For 2022, capacity is expected to be flat or increase up to 2% from the 2019 levels. CASM, excluding fuel and special items, is predicted to rise 13-14% from the 2019 actuals. Capital expenditures for 2022 are anticipated to be roughly $1 billion. Current-year interest expenses are forecast in the $160-$170 million band. Tax rate is anticipated to be 14%. Number of shares are expected to be roughly 324 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
The consensus estimate has shifted 121.71% due to these changes.
VGM Scores
Currently, JetBlue has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, JetBlue has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
JetBlue belongs to the Zacks Transportation - Airline industry. Another stock from the same industry, American Airlines (AAL), has gained 3% over the past month. More than a month has passed since the company reported results for the quarter ended September 2022.
American Airlines reported revenues of $13.46 billion in the last reported quarter, representing a year-over-year change of +50.1%. EPS of $0.69 for the same period compares with -$0.99 a year ago.
American Airlines is expected to post earnings of $0.54 per share for the current quarter, representing a year-over-year change of +138%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.4%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for American Airlines. Also, the stock has a VGM Score of B.
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